Lee Delivery Company Inc. was organized at the beginning of 2017. The following

Question

Lee Delivery Company Inc. was organized at the beginning of 2017. The following transactions occurred during 2017 (the company’s first year of operations):
  
a. Received $49,000 cash from the organizers in exchange for shares in the new company. b. Purchased land for $17,800 and signed a one-year note (at a 6 percent annual interest rate). c. Bought two used delivery trucks for operating purposes at the start of the year at a cost of $13,600 each; paid $6,800 cash and signed a promissory note for the balance, payable over the next three years (at an annual interest rate of 7 percent).
d. Sold one-fourth of the land for $4,450 to Birkins Moving, which promised to pay in six months. e. Paid $3,800 cash to a truck repair shop for a new motor for one of the trucks. (Hint: Increase the account you used to record the purchase of the trucks since the usefulness of the truck has been improved.)
f. Traded the other truck and $7,800 cash for a new one. The old truck’s fair value is $13,600.
g. Shareholder Jonah Lee paid $29,300 cash for a vacant lot (land) for his personal use. h. Collected the amount of the note due from Birkins Moving in (d).
i. Paid one-third of the principal of the note due for the delivery trucks in (c). P2-8 Analyzing the Effects of Transactions Using T-Accounts, Preparing a Statement of Financial Position, and Interpreting the Current Ratio over Time as a Bank Loan Officer LO2-5, 2-6 Lee Delivery Company Ine. was organized at the beginning of 2017. The following transactions occurred during 2017 (the company's first year of operations) a. Recelved $49,000 cash from the organizers in exchange for shares in the new company. b. Purchased land for $17,800 and signed a one-year note (at a 6 percent annual interest rate). G. Bought two used delivery trucks for operating purposes at the start of the year at a cost of $13,600 each paid $6,800 cash and signed a promissory note for the balance, payable over the next three years (at an annual interest rate of 7 percent) d. Sold one-fourth of the land for $4,450 to Birkins Moving, which promised to pay in six months 0.Paid $3,800 cash to a truck repair shop for a new motor for one of the trucks.HInt Increase the account you used to record the purchase of the trucks since the usefulness of the truck has been mproved f. Traded the other truck and $7,800 cash for new one. The old truck's fair value is S 13,600. g. Shareholder Jonah Lee paid $20,300 cash for a vacant lot land) for his personal use. h. Collected the amount of the note due from Birkins Moving in (d) Pald one-third of the principal of the note due for the delivery trucks in (c) Required: 1 Post the above transactions into the appropriate T-accounts, beginning balances is $0 for all accounts Short-Term Note Recelvable Beg. bal. Beg bal End.ba End. bal.

Explanation / Answer

Requirement 2b

             = 2.97 :1

Requirement 4

Should not extend loan.

Current ratio is reduced year to year. Inaddition to this, 2019 Current ratio is less than idle current ratio i.e. 2:1.

Cash Begining Bal. 0 Contributed capital 49000 6800 Equipment Short term Note Receivable 4450 3800 Equipment Income 29300 7800 Equipment 6800 Long Term Note Payable 1428 Interest on Long term note payable 82750 26628 Ending Bal. 56122 Short Term Note Receivable Begining Bal. 0 Land 4450 4450 Cash 4450 4450 Ending Bal. 0 land Begining Bal. 0 Short term Notes Payable 17800 4450 Short term Note Receivable 17800 4450 Ending Bal. 13350 Equipment Begining Bal. 0 Cash 6800 Long term Notes payable 20400 Cash 3800 Cash 7800 38800 0 Ending Bal. 38800 Short Term Notes payable 0 Begining Bal. 17800 Land 0 17800 17800 Ending Bal. Long Term Notes payable 0 Begining Bal. Cash 6800 20400 Equipment 6800 20400 13600 Ending Bal. Contributed Capital 0 Begining Bal. 49000 Cash 0 49000 49000 Ending Bal. Income Statement Interest on Long term note payable 1428 29300 Income on Vacant land Interest on short term note payable 1068 2496 29300 26804 Retained Earnings

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.